In this issue of The Informed Board, we go behind all the talk about companies reincorporating in states other than Delaware. In our lead article and our podcast, we point out that few companies actually moved, and we explain why Delaware retains its dominance as the jurisdiction for incorporation.
Meanwhile, a change of policy at the SEC is making institutional shareholders cautious about expressing their views to management for fear they will be forced to file burdensome ownership statements. We explain how companies can adjust their approach to shareholder engagement in order to give shareholders the information they want but may no longer feel free to ask for.
Finally, in interviews with two veteran directors, we glean firsthand lessons about planning and pulling off a spinoff, and about weighing the right mix of experience and skills needed for a board.
Delaware Tells Companies: ‘Let’s Stay Together’
Delaware remains the jurisdiction of choice for major corporations, and recent amendments to state law are expected to curb litigation over transactions and insulate directors, officers and controlling shareholders when they follow newly clarified procedures for transactions where there are potential conflicts.
Making Sure Newly Cautious Shareholders Get the Information They Want
Recently revised SEC interpretative guidance on its ownership reporting rules is altering shareholder engagement, making institutional investors circumspect about raising issues with management. As a consequence, companies need to revise their approach to shareholder engagement.
Director Judy Bruner on Finding the Right Mix of Skills for a Board
Ideally, a board should include a mix of industry veterans and outsiders with fresh perspectives, a variety of functional skills and C-suite experience with governance and investors.
Director Matthew Massengill Shares Firsthand Lessons About Splitting a Company
Creating two new boards and executive teams requires careful thought about each company’s needs, and directors need to maintain their focus on managing the business while shouldering the additional work a spinoff entails.
Podcast: Should Your Board Consider a Move Out of Delaware?
Delaware is widely regarded as having the most business-friendly legal framework in the nation. Yet, a handful of companies have announced plans to reincorporate outside of the state. In our podcast, a Delaware judge and a senior partner in Skadden’s Wilmington, Delaware office describe the state’s unique focus on corporate law, including well-developed case law, a flexible corporate code and responsive executive and legislative branches, and why reincorporation outside of the state may not be the right move for your company.